Analyzing Opportunities and Challenges of Big Data in the Accounting

This essay explores the opportunities and challenges presented by big data within the accounting field. It begins by defining big data and its characteristics (volume, variety, velocity, and veracity). The essay then delves into the opportunities big data offers across various accounting branches, including financial accounting (improving information relevance and quality), auditing (data-driven audits, enhanced client-auditor relationships, valuable insights), advisory services (business performance screening and improvement), taxation (identifying improvement areas), and management accounting (risk identification and performance improvement). The challenges associated with big data are also discussed, such as scalability, lack of experience, actionable insights, data quality, security, and cost management. The essay concludes that big data presents both significant opportunities and challenges for the accounting profession and that its effective utilization can lead to improved financial performance and decision-making.

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Discuss the Opportunities and Challenges of the Big Data in the Accounting
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Introduction
Big data differs across the numerous scopes. Basically, big data is said to relate to
widespread mass of the data which is progressively assembled and amassed using debit cards,
social media, the internet, as well as d electronics tags1. Big data are described as the high
velocity, variety and volume of information which is said to demand innovative and
economical forms of the information handling; hence enabling better policymaking, process
automation as well as insight. Big data is data that is complex and cannot be analysed by the
traditional tools of analysing data such as spread sheet. Basically, it is usually the collection
of various data management applications supporting numerous analytics use. Big data is
classified into four that is;
• Volume: The quantity of the generated data is extensively compared to the traditional
data sources. Measured in terabytes.
• Variety: The data originates from various sources that include both the machines and
individuals.
• Velocity: This is the rate at which the data is created which is at a fast speed.
• Veracity: Due to the various sources that the data is derived it has to be evaluated for
quality purpose due to its inconsistent, incomplete and inaccurate nature.
Opportunities of the Big Data in Accounting
Big data would have significantly vital insinuations in accounting, whilst the premier
types of the data are made readily available2. The audio, textual information and video
information freely accessible via the big data could offer an opportunity for improved
accounting. Besides, big data would contribute significantly to evolution and development of
efficient management control as well as budgeting processes3. With these considerations, big
data would have various opportunities in accounting. These opportunities are enjoyed in
1 Benjamins Richard 2014, 2-1.
2 Forsyth Chris 2012.
3 Bhadani and Jothimani 2016, 1-24

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various branches of accounting which include financial accounting, taxation, auditing as well
as management accounting.
Opportunity of Big Data to Financial Accounting
Big data in accounting may appear to have two trends. First, the different sources of
the accounting information are being combined and integrated into and accounting
information system such as the video, audio and text data are linked to the traditional data4.
For this reasons the accountants need to have advanced skills to analyse such huge
information found in the accounting information system. Secondly, there is change in the fair
value accounting which is worried on prizing of the assets. Consequently, big data would
offer an opportunity to improve relevant and quality of the accounting information, hence,
enhancing transparency as well as stakeholder’s decision-making. Due to the huge data, this
could result in there being assumptions in valuing the assets and liabilities despite there being
companies that can assist a business in the valuation of the assets and liabilities.
Opportunity of Big Data in Auditing
In auditing branch the big data has various opportunities such as producing audits that
are data driven. In this the audit trail has data that contains details about the business and all
that is to be audited5. The audit trail is well constructed by the auditor since the information to
be audited is in form of data which is easier to be audited since all the information is there
hence the auditor is able to produce the audit report in an easy manner. For the audit trail to
be easy for the auditor the auditor must use the big data in following how their customers
manage data. The big data also improves the relationship and experience for both the client
and the auditor6. For the client, using the big data is able to compile and combine all the data
to be audited in an easy way and thus stores the data in safe way.
The big data improves the experience of auditor by having the population level being
4 Richins et al 2016.
5 Tripathi et al. 2016, 119-149.
6 Cao and Stewart 2015, 423-429.

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feasible, the role of the auditors will be changed from the statement-level assurance to the
data-level assurance, the auditor will face less challenges in asserting the existence of fixed
assets and the auditor will use text analytics to manage unstructured data7. It is also easier for
the auditor to create a good audit trail and the auditing process is very fast and not tiring
which will enable him or her to have sufficient time in making appropriate decisions about
what to include in the audit report. It also reduces the cost of audit and enhances profitability.
Big data also produce valuable insights such that the auditor gets to know more facts that will
help him or her to make an audit report. The auditor is able to analyse both the organized as
well as formless data8. The user is enriched with knowledge on how to collect, conglomerate
and examine the data and ensure it is ready for auditing purposes as well as assess how to
stock the data for future reference.
Opportunity of Big Data on Advisory Services in Accounting
The big data is also involved in advisory services for accounting. In this branch it has
the opportunity of providing assistance on how to screen and improve the business
performance9. This is done by providing the ways that could be able to screen on how the
firm is performing by checking on the profits for the previous years and observing its
movement. Big data also offers the prototypes that could be used in analysing the
performance of the business to help in support of improving the product produced by the
business and the operational processes. Basically, it could assist with refinement and creation
of the accounting standards, assisting in ensuring that accounting profession would continue
to offer important or significant information as global, real-time and dynamic economy
evolves10.
Opportunity of the Big Data in Taxation
7 Yoon et al. 2015, 431-438.
8 Krahel and William 2015, 409-422.
9 Vasarhelyi et al. 2015, 381-396.
10 Warren et al. 2015, 397-407.

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In the branch of taxation, it is known that big data has several opportunities. One of
the opportunities is that big data helps in identifying the areas in taxation that can be
improved such as the mode of collection and calculation of taxes11. It can also help in
identifying the opportunities in the world that are involved in taxation such as the best ways
used in utilisation of taxes once collected in a country for the improvement of the life of the
citizens in the country.
Opportunity of Big Data in Management Accounting
Big data in accounting also has the opportunity in management accounting which is
that it helps in risk identification and management. It helps identify the risks within and
without the business. It provides strategies that help in the management of the risks12.
Provides information on where the business can invest despite the risk to help providing
better products and services to the customers and consumers of its products and services. Big
data has the opportunity of improving the performance of management systems. This could
be done when the business adopts the big data techniques of analysing data which can lead to
the traditional management being changed which is done by implementation of extensive and
comprehensive monitoring and control systems. Basically, big data could contribute to
evolution and development of effective budgeting and management control processes13.
Challenges of Big Data in Accounting
There is no doubt that bid data is considered as a disruption to the management and
organizations which have widespread effect. Consequently, big data poses challenges as well
as various implications for the theory in the information system resulting from big data
disruptive impacts14. With these considerations, following challenges are observed with big
data.
11 Benjamins Richard 2014, 2-1.
12 Richins et al. 2017, 63-79.
13 Mohanty et al. 2013, 1-24
14 Tripathi et al. 2016, 119-149

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Scalability
Many organizations fail to take into consideration on how the big data quickly project
evolves. Constantly one is forced to add data so as to be able to analyse it15. The big data is
huge thus making it difficult for one to classify and allocate the resources. This can be solved
by using cloud which helps scaling in an easier and faster way.
Lack of Experience
In business there is shortage of the people with skills to handle big data. Big data
requires skilled people with knowledge of identifying valuable insights16. This challenge is
solved by the big data vendors who tend to provide their own educational resources.
Actionable Insights
A lot of data leads to a challenge of identifying a clear business goals as well as
suitable data sources to be collected and analysed in order to meet such goals17. This
challenge is solved by identifying key patterns and thus the business is prepared to make the
more appropriate changes to develop the most appropriate business values.
Data Quality
Quality of the data is not necessarily a big issue but the issue of how to stockpile
every single portion of the data that an organization creates in its unique form shams the
challenge18. Unclean data is aid to be costly to different firms and they are caused by input
errors, incorrect link as well as duplication of data. In this case to solve this solution the data
is cleaned by using big data algorithms.
Security
Security of the big data poses challenges such as recording of data and there are no
restrictions of accessing data19. These challenges can be solved by most appropriate
15 Vasarhelyi and Brad 2015, 381-396.
16 Yoon et al. 2015, 431-438.
17 Richins et al. 2017, 63-79.
18 Bhadani and Jothimani 2016, 1-24.
19 Yoon et al 2015, 431-438.

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utilization of encryption on the data and limiting access of such data based on the user's
needs.
Cost Management
According to researches, it is hectic to estimate the costs or expenses of the big data
scheme provided the manner in which to scale and utilize the resources20. The main challenge
lies in considering costs incurred in the project from obtaining or getting new hardware,
payment of the cloud supplier and hiring extra workers. This challenge is solved by
determining the usage of bills and additional fees.
CONCLUSION
To sum up, big data is an emerging issue in the accounting process. It can be used for
decision making for different branches of accounting. Big data has more opportunities which
well utilised can improve the financial performance of business. Big data can cause a
potential shift permitting events to be sketched and assessed early enough and deeper. For the
business the best solution is to use big data. Furthermore, big data would have significantly
vital insinuations in accounting and would contribute significantly to evolution and
development of efficient management control as well as budgeting processes. As such, it can
be concluded that big data offer various opportunities in accounting. For instance, big data
would offer an opportunity to improve relevant and quality of the accounting information,
hence, enhancing transparency as well as stakeholder’s decision-making. It can also be
concluded that big data improves the relationship and experience for both the client and the
auditor. For the client, big data is compiled and combined to be audited in an easy way and
thus stores the data in safe way. Additionally, it can be concluded that big data helps in
improving the experience of auditor by having the population level being feasible, the role of
the auditors will be changed from the statement-level assurance to the data-level assurance,
the auditor will face less challenges in asserting the existence of fixed assets and the auditor
20 Tripathi et al. 2016, 119-149

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will use text analytics to manage unstructured data. This is because it offers valuable insights
such that the auditor gets to know more facts that will help him or her to make an audit
report. It has the opportunity of providing assistance on how to screen and improve the
business performance. It also offers the prototypes that could be used in analysing the
performance of the business to help in support of improving the product produced by the
business and the operational processes. Besides, it can be concluded that big data helps in
identifying the areas in taxation that can be improved such as the mode of collection and
calculation of taxes. Finally, it can be stated that big data has the opportunity of improving
the performance of management systems. It contributes to evolution and development of
effective budgeting and management control processes. Despite these opportunities, it can be
concluded that big data has its share of challenges. For instance, it can be concluded that big
data has numerous challenges such as security, data quality, lack of experience, actionable
insights as well as cost management. In spite of these challenges, opportunities associated
with big data outweigh the challenges; hence, business and accounting officials in particular
do not have an option but to integrate big data in their operations.

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